Question

Treasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the reissuance would include a credit to

a.Treasury Stock for $6,500.
b.Paid-In Capital from Sale of Treasury Stock for $6,500.
c.Paid-In Capital from Sale of Treasury Stock for $1,000.
d.Paid-In Capital in Excess of Par—Common Stock for $1,000.

Answer 1

The correct answer is C

Step-by-step explanation:

The journal entry for the re- issuance will be as follows:

Cash A/c....................................................Dr $6,500

Treasury Stock A/c...........................................................Cr $5,500

Paid-In Capital from Sale of Treasury Stock A/c........Cr $1,000

Working Note:

Paid-In Capital from Sale of Treasury Stock = Cash - Re-issued amount

Paid-In Capital from Sale of Treasury Stock = $6,500 - $5,500

Paid-In Capital from Sale of Treasury Stock = $1,000